DDDI

1. Chapter 8:
Services Marketing &
Customer
Relationships

2. The Nature of Services
 regardless of the “product”, there is a services
aspect to the offerings of all firms. Services
organizations now account for a major part of
the national economy
 in some cases, a service is the principal purpose
of the transaction, as in the rental of a car, a
haircut, or legal services -- we refer to this as
the core service
 in others, service is performed in support of the
sale of a tangible product -- these are referred to
as supplementary services

3. Figure 8-1
A Goods-Services Continuum

4. Marketing in Service Organizations
 marketing has historically been focused on tangible
products
 many service organizations are in the not-for-profit
sector and have not been particularly marketing-
oriented or customer-focused
 service industries have become much more
competitive in recent years; technology has made it
difficult to compete on tangible products
 service is now seen to offer competitive advantage

5. Characteristics of Services
 intangibility: difficult to sample and evaluate
 inseparability: difficult to separate services
from the provider; staff are essential to the
delivery of quality services
 heterogeneity: virtually every service is
different; very difficult to standardize quality
 perishability: those not sold can not be stored
 fluctuating demand: demand for some services
fluctuates by season, or by time of day

6. Strategic Services Management
 intangibility generally makes the marketing of
services a challenge
 understanding how people buy services and
the segments that exist is just as important
 knowing more about the value of customer
segments is important -- some are more
valuable than others
 knowing what they value so that service levels
can be tailored is also important

7. Services Value Proposition
the value proposition in a services setting is
influenced by services’ characteristics
services firms must get the core service right
they must provide solid support service
and they must deliver excellent service to
their customers
make sure we understand these three
different uses of the term “service”

8. Figure 8-2 The Services Value Proposition

9. Strategic Aspects of the Core
to succeed at the marketing of services, the
essential marketing mix principles apply:
understand the customer
plan the core offer (product/service)
set an attractive and fair price
distribute the service conveniently
promote it effectively

10. Strategic Product Implications
 service organizations have to plan the
introduction of new services and the
management of the life-cycle
 the core service can be enhanced through the
addition of supplementary services, thereby
creating added value (the service mix)
 the branding of a service can be difficult as the
customer often has nothing tangible to show

11. Pricing of Services
 pricing is more difficult in services because of
heterogeneity and variability of the “product”
 because of intangibility, buyers of services often
have difficulty assessing value received
 it is more difficult to standardize a price for a
service than it is for most physical products
 nevertheless, services firms use many of the
same pricing strategies: volume and frequency
discounts, variable pricing, etc..

12. Distribution of Services
 because most services are tied directly to a specific
service provider, most have been distributed
directly to customers
 with advancing technology, many firms are now
delivering services through technology channels
 channels of distribution are necessarily short; some
firms use one agent intermediary, such as
insurance, real estate, and travel agents
 some firms use franchises to distribute services

13. Promotion of Services
 customer contact personnel represent the main
channel of customer communication
 service providers must ensure that each service
encounter is a positive one if customers are to
develop a positive image
 many professional service firms are now
permitted to advertise
 other elements of the promotional mix used
include publicity and community affairs

14. Supplementary Services
 regardless of the quality of the core service, a firm
must offer a range of support services that enhance
the attractiveness of the core
 customers need information
 they need the service to be accessible
 they need warranties, installation and repair
 they need a selection to choose from
 it should be delivered in pleasant surroundings

15. Figure 8-3
Types of Supplementary Services

16. The Role of Customer Service
 one of the most effective ways to compete and
to differentiate one’s company is on the basis
of providing superior service
 in many ways the distinction between tangible
products and services is becoming less
important for marketing purposes
 marketers must pay attention to delivering
superior quality in both the tangible and
service components of the total offering

17. Managing Service Quality
 quality is more difficult to define in services;
depends on customer’s perception
 very difficult to maintain consistent quality
 perceived quality varies across customers, and
over time and circumstances
 the customer is concerned about the quality of
the core product or outcome, the process of
service delivery, and interaction with staff
 many companies turn to an internal marketing
program to encourage staff buy-in

18. Components of Service Quality
 the core service: the basic telephone call
 quality of support services such as billing, repair,
installation, voice mail, etc.
 technical aspects of service quality, including
whether errors are made; on-time service
 interaction with staff: whether our people are
friendly, courteous, helpful, attentive, etc.
 emotional dimensions: how the customer is made
to feel in dealing with the company

19. Service Failure and Recovery
no matter how well designed the core
service, things will occasionally go wrong
how the company responds to service
failure is key to customer satisfaction
effective service recovery can actually
make a customer more satisfied than he or
she was before the problem occurred
many firms encourage complaints! WHY?

20. Service Drives Relationships
 the level of core, support and personal service
provided to customers is a key driver of
satisfaction and relationships
 service represents a valuable form of value –
customers appreciate good service
 firms are able to create both functional and
emotional value for customers – it is the
emotional value that leads to relationship
formation

21. Services Marketing Challenges
 possibly the greatest challenge for services firms
is to ensure consistently high quality of service
and increased productivity
 many are investing heavily in technology --
they need to assess its impact on service quality
 firms will need to improve their approach to
measuring the quality of the service they
provide and to benchmark against other firms
 growth in emphasis on service will continue and
firms will have to deliver better services